More shocking trade numbers from China

When will Congress start to get serious about trade policy with China? Today, the Chinese authorities reported their trade surplus for the first two months was $39.6 billion, more than triple the same period last year. Exports gained 52 percent in February, the biggest jump since 1995. Imports climbed 13 percent.

The Chinese central bank have kept the Yuan low, and made their exports very cheap. This policy helps industrialise and strengthen China and facilitiatse its expansionist aspirations. However, it is also exploitative. Chinese wages are kept artificially low. In effect, poorly paid chinese workers subsidize the unwarranted and slovenly lifestyles of flabby Americans.

The under-valued exchange rate pumps cheap goods in to the US and destroys our manufacturing base. This policy has led to China accumulating foreign-currency reserves amounting to a record $1 trillion, a fifth of the world's total. The stock of reserves is now so big that it has become useless. Any attempt to reduce their holdings of US dollars would destabilise foreign exchange markets, leading to a run on the dollar and a sudden and uncontrollable appreciation of the Yuan.

Nevertheless, the Chinese keep talking up a change. China's central bank Governor Zhou Xiaochuan today pledged to accelerate the drive to a market-led financial system. He also pledged to loosen controls on interest rates and begin to bail out loss-making state banks. Fu Ziying, assistant minister of commerce also promised to cut some import tariffs and export rebates. Apparently, these measures are supposed to pave the way for a more flexible yuan, and fend off calls in Congress for trade sanctions.

The message from these numbers to Congress is clear; give the US manufacturers some protection.